ISQA 459559

1
ISQA 459/559

• Make?Buy and Outsourcing
• Supplier Relations
• Supply Chain Strategy

2
Make/Buy

• Industry Standards, Proprietary Products and
  Make/Buy
• Procurement from Suppliers
• Porcurement by Manufacture
• Fluid Decision
• Revisit at Regular Intervals
• As Economic Conditions Change
• As Internal Conditions Change
• Always Maintain Internal Capability

3
Reasons to Make

• Quantities Too Small
• Quality Too Critical
• Timing Too Critical
• Trade Secrets (for a time)
• Cheaper
• Keep Crew Busy
• Avoid Sole Source (perhaps)
• Union Shop

4
Reasons to Buy

• Quantities Too Large
• Supplier Quality Acceptable
• Have Sufficient Lead Time
• Lack of Necessary Competencies
• Lack of Capacity
• Cheaper
• Reciprocity

5
Outsourcing

• Strategic Decision
• Activity is Not Core Competency
• Will, In Future Completely Depend on Suppliers
• Will No Longer Maintain Internal Capability

6
Supplier Relationships

• Risk and Numbers of Suppliers
• Supplier Performance
• Managing Supplier Relationships
• Interdependencies
• Motivation
• Reward Power
• Punishment Power

7
Supplier Relationship Goals

• Long-term
• Collaborative
• Early Supplier Involvement
• Growth Capabilities
• Create Competitive Advantage

8
Strategic Planning

• Mission Statement
• Vision Statement
• Strategies
• Long-Term Action Plan
• Commits Organizational Resources
• Creates Competitive Advantage
• Performance Measures

9
Strategic Planning Steps

• Developing the Vision
• Translating the Vision into Goals
• Developing the Strategies to Achieve the Goals
• Selling the Strategies
• Executing the Strategies
• Tracking Progress

10
Strategic Planning Steps Developing the Vision

• Determining the Time Horizon
• The Macro View
• Global Economy
• National Economy
• Industry Development
• The Micro View
• What is Desired State for the Organization

11
Strategic Planning Steps Translating the
Vision into Goals

• Vision Drivers
• Activities
• Materials
• People
• Technologies
• Stretch Targets

12
Strategic Planning Steps Developing Strategies
to Achieve Goals

• Strategies Should
• Mold Decisions to Produce a Consistent Pattern
• Focus Resources
• Ease Trade-off Decisions

13
Strategic Planning Steps Developing Strategies
to Achieve Goals

• Supply System Strategies May Involve
• Staff
• Technology
• Resources
• Time
• Supply Base

14
Strategic Planning Steps Developing Strategies
to Achieve Goals

• Corporate Goal Congruency
• Internal Customer Impacts
• External Supplier Impacts
• Defining Resources to Implement
• Defining Resources to Sustain
• Defining Structure

15
Strategic Planning Steps Selling the Strategies

• What are the Benefits
• WHO Benefits
• Making the Business Case
• Finding the Right Avenue
• Finding the Right Pitch
• How to Get your Point Across in 30 Seconds or
  Less Milo Frank

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Strategic Planning Steps Executing the Strategy

• Operationalizing the Strategy
• Organizational Structure
• Staff
• Training

17
Strategic Planning Steps Tracking Progress

• Establishing Metrics
• What to Measure
• Setting Milestones

18
Purchasing and Supply Strategies

• A Strategy for Each Commodity
• A Strategy for Each Supplier
• Current Situation
• Future Situation
• Methodology to Achieve

19
Development of Commodity and Supplier Strategies

• Identify Critical Elements
• Cost Drivers
• Critical Materials
• Key Technologies
• Determine How to Manage
• The Commodity
• Each Supplier Within the Commodity

20
Commodity Strategy

• Industry Standard or Custom
• Criticality
• Market Study / Commodity Study
• Global
• Domestic

21
Commodity Strategy

• Sourcing Strategy
• Single or Multiple Sources
• Price/Cost Analysis
• Contract Type
• Automation
• Logistics
• Inventory
• Transportation
• Supplier Evaluations

22
Supplier Strategy

• Formal Analysis
• Capability, Capacity, etc.
• Present Status, Desired Status, Methodology
• Performance Improvements
• Additional Services
• Administrative Improvements
• Consignments
• What Must WE Do?

23
Strategy Development Example Nuts and Bolts

• Critical Elements
• Quality (Counterfeit)
• Availability
• Minimize Administrative Cost
• Strategy
• Single Source
• Local Supplier
• Or Consigned Inventory
• Known Manufacturer
• VMI

24
Commodity Studies